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GCC aluminum projects in full swing
Published in The Saudi Gazette on 22 - 09 - 2010

Gulf oil producers are pushing ahead with mega aluminum projects valued at $22 billion which will boost their output to 10 million tons and allow them to control 18 percent of the world's total aluminum output.
The six Gulf Cooperation Council countries, which sit atop 45 percent of the global recoverable oil deposits produced around 2.2 million tons of aluminum in 2009 and new smelters and expansions of existing units will push their combined output to nearly 3.7 million tons by the end of 2010.
The six-member group has pumped in excess of $130 billion into the non-oil manufacturing sector to build light to medium industries, including petrochemicals, building materials, medical supplies, chemicals, foodstuffs, paper, furniture, home appliances and machinery.
Official figures showed the six Gulf Cooperation Council (GCC) countries have spent in excess of $15 billion on aluminum smelters, more than 10 per cent of their total non-oil industrial investments.
Saudi Arabia is planning to set up a $3.8-billion smelter while Oman has completed its first aluminum plant in Sohar.
“The GCC countries are expected to invest nearly $22 billion until 2015 to set up new aluminum projects and expand their existing smelters,” said the Doha-based Gulf Organization for Industrial Consulting (GOIC, which advises on non-hydrocarbon industrial plans in the 29-year-old Gulf group.
“The investments will boost the GCC's combined aluminum production from around 2.2 million tons in 2009 to more than six million tons and this will allow the GCC to become a major global aluminum producer.”
GOIC said the investments include around $5.8 billion in Qatar's new smelter, which has just been established with a production capacity of around 585,000 tons per year.
About $8 billion will also be pumped by Emal in Abu Dhabi to push up output to 1.4 million tons while more expansions are on the cards in Dubai and Bahrain, where the region's first smelters were set up.
GOIC said regional states need to push ahead with such projects to face a rapid rise in domestic demand because of massive infrastructure projects. External demand for their products is also expected to surge as global consumption will likely pick up in the near future following a slowdown due to the 2008 global fiscal crisis.
Citing world estimates, it said global aluminum demand is forecast to soar to nearly 70 million tones by 2020 from around 37 million tones currently.
“The expansions and new projects in the GCC countries will enable them to offset any decline in other parts of the world as some smelters in Europe, south Asia and North America could be shut because of high costs,” GOIC said.
“Such developments will depress global supply and this will boost demand for GCC aluminum as the region does not have any problems with costs given its enormous energy resources which make these projects more feasible.”
In a recent study, Emirates Industrial Bank (EIB) said Dubai and Bahrain are pursuing plans to expand their output to nearly 2.5 million tons per year.
It said the expansions and projects under way in other GCC members would lift their combined output to 6-7 million tons in 2015.
Experts expect the total investment in the GCC's aluminum industry to exceed $30 billion by 2020 and said this would give a strong push to long-term programs by member states to diversify their oil-reliant economies.
The UAE and Bahrain were the first Gulf countries to set up smelters 30 years ago. Dubal aluminum plant in Jebel Ali produced a record 935,000 tons last year while output from Bahrain's Alba smelter stood at 830,000 tons.
But there are long-term programs to expand the capacity of the two smelters to face growing demand from their customers in Japan, South Korea and other key Asian consumers, which rely heavily on the Gulf for their aluminum needs given the high costs of their domestic projects.
Besides its expansion, the latest in a series of development projects over the past decade, Dubal has teamed up with Mubadala Development Company to build the world's largest aluminum complex in Taweela just outside the capital.
Emal is now producing around 720,000 tons but capacity in the second phase of construction will surge to nearly 1.4 million tons per year.
By the end of 2010, the GCC's combined aluminum production will account for nearly 9 percent of the world's total output. In 2015, production is expected to reach 10 million tons accounting for about 18 percent of the expected global smelters production.


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